Financial Services Association, May 7 (Reporter Lu Tingting) Hongxin Electronics (300657. (SZ) The subsidiary signed a 1.5 billion yuan computing power server product sales contract today. A Financial Services Association reporter called the Hongxin Electronic Securities Department about this. Its staff said, “It is not clear when delivery will begin. Because of the specific situation and order in the end, we need to do it in detail; this is only a framework.”

Hongxin Electronics announced today that its subsidiary Gansu Suihong Artificial Intelligence Technology Co., Ltd. (Suihong Artificial Intelligence Technology Co., Ltd.) and Qingyang Jinghe Cloud Computing Technology Co., Ltd. (Jingheyun for short) signed a “Sales Contract” on May 7. The contract agreed that Beihe Cloud will dispose of three phases of the purchase of computing power server products with an estimated total purchase amount of 1.5 billion yuan. The specific purchase amount and amount will be clarified separately by the two parties.

As mentioned in the contract, the procurement amount for the first phase is 500 million yuan, which is expected to be completed by June 30 this year; the second phase of product procurement and the third phase of product procurement will be carried out according to the actual demand schedule, which are expected to be completed within one year after signing this contract. The procurement amounts for phase 2 and phase 3 products are estimated to be RMB 500 million respectively.

Hongxin Electronics said that the execution of this order is an important part of the company and Qingyang City's joint plan to implement 40,000 P computing power in Qingyang in 2024. The signing of this agreement will help the company to continue to achieve revenue and profits in the computing server manufacturing business, enhance the company's profitability, and meet the company's development strategy plan. If the contract is successfully executed, it is expected to have a positive impact on the company's operating performance.

Hongxin Electronics, which originally focused on flexible circuit boards, entered the AI computing power industry last year. According to reports, by the end of 2023, the company had launched a multi-heterogeneous green computing power base of 3000P computing power in the Qingyang data center cluster. The 4000P computing power mentioned above will focus on supporting the training needs of domestic large model customers and form the largest AI model training base in China. At the same time, on the basis of model training, the vertical training needs and inference needs of customers in various industry segments are taken into account.

According to Hongxin Electronics' 2023 annual report, the company delivered a large number of AI server sales orders last year, and continued to place new orders in the first quarter of 2024.

The Financial Services Association read through the financial report and learned that the company's new AI business has achieved results. In the first quarter of this year, Hongxin Electronics achieved operating income of 1.67 billion yuan, an increase of 161.08% over the previous year; net profit to mother was 28 million yuan, an increase of 137.72% over -75 million yuan in the same period last year. According to Hongxin Electronics, the computing power business added 760 million yuan in Q1 this year, mainly from the sales revenue of computing power servers. Currently, the computing power leasing business is being implemented one after another, and efforts are being made to make good progress starting in the second quarter.

Recently, in response to investors' questions, the company stated that “in addition to orders from China Beijing Power Investment, the company's computing power server revenue includes orders from various other customers such as Gansu Telecom.”

As of today's close, Hongxin E-News was 17.98 yuan/share, up 1.12% during the day, with a total market value of 8.782 billion yuan.